In a time when education costs have skyrocketed to astronomical proportions, CPOs have a unique opportunity to contribute strategically to optimizing and streamlining operational costs for their universities and colleges. And while many CPOs may feel they are already doing a good job containing costs and innovating in the management of supply chains, my guess is that there is more work to be done here—especially around how to use spend analytics to your strategic advantage.

While many academic institutions have technology to manage purchasing, contracts and suppliers, many of these systems are fragmented and don’t offer visibility across campuses and departments to the supply chain. This blindness could be what’s holding you back from making a real difference to your institution’s bottom line.

To help you understand the power of spend analytics, here are seven ways you can use this powerful data to not only control costs but better understand how spend affects your organization’s performance.

Identify Savings Opportunities: When you identify the specific areas of spend, you can further segment this spend by supplier to understand which source provides the best opportunity for savings. This data can be used to negotiate with suppliers for greater discounts, consolidate purchases to suppliers who offer the best pricing or terms.

Understand Aggregate Spend. Spend analytics data allows you to practice foresight and strategic planning to your advantage. When you are able to see spend data as a big picture, you can better understand its impact on overall performance. What does your institution buy? Who buys it? How is it bought? This visibility into spending allows you to fix processes and streamline procedures to enhance operations.

Assess Supplier Performance. Spend analytics data allows you to examine your supply chain to identify over-dependencies, quality issues, potential risks and more. You can assign and rank key performance indicators that are most important to your institution and then use this as a yardstick against your supply chain.

Drive Contract Compliance. Awarded contracts need to be continually examined and negotiated to ensure you’re achieving the best value. Spend analytics provides a window into contract compliance by ensuring that only preferred vendors are being sourced, contract prices are being adhered to and discounts are being applied. There are a lot of complexities to contract compliance and a lot of opportunity for waste, if it’s not properly examined.

Provide Analysis for Forecasting and Planning. If you know where you’ve been, you’re more likely to get to where you need to be. With visibility into spend trends you are better able to make more informed decisions about supplier relationships so that you can improve processes.

Benchmarking Against Market Spend. Baselining, goal setting and improvement tracking are mission critical and benchmarking is the basic yardstick in this self-evaluation activity. Spend analysis tools can help you create internal benchmarks so that you can monitor performance and make modifications for continuous improvement so that you can remain competitive.

Gain Greater Departmental Efficiency. Sharing meaningful information across campuses and departments increases savings. Spend analytics allows you to change the buying behavior of the entire institution by allowing departments visibility to contract terms, preferred suppliers and tools to better manage their spend and more effectively.

Where to Start

Leveraging spend analytics demands a shift from a tactical approach to controlling costs to a more strategic model, where spend procurement is seen as a major contributor to enhanced organizational performance. When CPOs know who their suppliers are, what they are spending and how those relationships tie into the university mission, there is power in truly creating an impact through procurement. With the constant challenge to do more with less, spend analytics is the first step to using data to your advantage to develop strategies that will move your institution to the top of the ranks.

]]>Strategic Sourcing and Contract Compliancehttps://www.jaggaer.com/strategic-sourcing-contract-compliance/
Wed, 31 Jan 2018 15:26:33 +0000https://www.jaggaer.com/?p=18696The Right Prescription to Control Healthcare Costs and Achieve Higher Savings As a healthcare CPO, your main goal is to ensure your supply chain is running at peak efficiency in order to achieve top operational performance and the highest quality patient care—all while controlling costs. That’s quite a juggling act! So, how do you evaluate […]

]]>The Right Prescription to Control Healthcare Costs and Achieve Higher Savings

As a healthcare CPO, your main goal is to ensure your supply chain is running at peak efficiency in order to achieve top operational performance and the highest quality patient care—all while controlling costs. That’s quite a juggling act!

So, how do you evaluate the effectiveness (let alone control) your supply chain when you don’t have the control or visibility you need to track and manage inventory, contracts and suppliers?
Strategic Sourcing and Contract Compliance may hold the key.

Wasteful Healthcare Spending

The cost of providing healthcare continues to rise—worldwide. There are a number of contributing factors, however wasteful spending on supplies and equipment ranks near the top.
According to a study conducted by ProPublica, hospitals routinely toss out new supplies and gently-used equipment. While no one tracks the total waste, the University of California, San Francisco Medical Center conducted a study tracking the waste during neurosurgery operations in the U.S. in just one year. The discarded supplies topped $2.9 million.[¹]

Healthcare procurement departments are in prime position to both mitigate increases in expenses and reduce waste, thereby improving overall patient care. By employing strategic sourcing and contract compliance, healthcare organizations will have the control, visibility and options into sourcing activities to turn the tide on wasteful spending.

What is Strategic Sourcing?

Strategic sourcing is the act of transforming your supply chain activities into a strategic function to optimize efficiency, reduce waste and improve overall organizational performance. Strategic sourcing has far-reaching benefits other than just reducing waste. Just imagine how improving the supply chain can affect operational efficiencies to the extent that they could actually affect clinical outcomes and improve patient care—that’s the power of strategic sourcing.

With supply chains accounting for as much as 30 percent of total hospital costs, strategic sourcing has the potential to achieve significant impact. How?

It stimulates competition between providers

Provides more visibility and options into sourcing activities

Forges more strategic relationships with current suppliers by providing an easy process for bidding, on-boarding and account management

Provides a central location to store and access all supplier information in order to analyze and identify opportunities for savings.

Keeping Costs in Check with Contract Compliance

Technology advancements in healthcare are typically focused on the clinical side. However, organizations that leverage back-office automation and process improvements stand to benefit greatly when it comes to containing costs as it relates to supplier contracts.

According to Gartner research, many healthcare providers can reduce supply chain costs by 10 to 15 percent if they better analyze, plan and control the purchase of goods and services. Back office automation that includes contract compliance capabilities helps increase the visibility and control of supplier contracts by:

Ensuring preferred suppliers, contract terms, and policies are visible and accessible to the entire organization

Provides a process for managing contracts, including preventing auto-renewals and paying for products you no longer need

Accelerates processes involved in contract creation

Final Thoughts

Skyrocketing healthcare costs translate into higher insurance and patient costs. Being a good procurement steward means doing your part to help reduce waste and contain costs through strategic sourcing and contract compliance. If your organization is not deploying eProcurement to help manage its supply chain, now’s the time to make the change.

]]>Speed Up Retail Time-to-Fulfillment with eProcurementhttps://www.jaggaer.com/speed-retail-time-fulfillment-eprocurement/
Mon, 22 Jan 2018 19:36:37 +0000https://www.jaggaer.com/?p=18661How to Gain a Competitive Advantage in Today’s eCommerce Retail Buying Space Gaining a competitive advantage against retail goliaths like Amazon is no easy task, but it’s not impossible. How do traditional retailers win in an eCommerce-centric world? Speeding up time-to-fulfillment is the key. eCommerce is booming and many retailers are scrambling to compete. Within […]

Gaining a competitive advantage against retail goliaths like Amazon is no easy task, but it’s not impossible. How do traditional retailers win in an eCommerce-centric world? Speeding up time-to-fulfillment is the key.

eCommerce is booming and many retailers are scrambling to compete. Within the past few years, we’ve seen massive growth in retail eCommerce worldwide. Online sales in the United States alone are expected to reach $523 billion in the next five years, up 56% from $335 billion in 2015.¹ Today, it’s estimated that 25 percent of all purchases are done online.

But, despite these online buying trends, customers still expect a level of high-touch around their purchasing experience: such as well-packaged goods and clear and prompt communication as it pertains to orders. This is good news for traditional retailers where customer service is a cornerstone of their value proposition.

So what does it take to succeed in the race to meet the demand of today’s 21st-century buyer? It really boils down to fulfilling orders quickly, with a high level of quality and efficiency while keeping costs low.

With the right technology and a creative approach, traditional retailers can leverage existing storefronts, supply chains and analytics to deliver a high-touch customer experience while remaining competitive to meet the demands of today’s consumers.

Three Important Considerations to Fulfillment

Inventory Management: In online purchasing and distribution, real-time view and control of your inventory by source that includes distribution centers, retail outlets, warehouses, and third-party suppliers is critical. You may have an inventory management system, but can it track and integrate both online and in-store inventory in real-time? If not, it may be time to reevaluate your system.

Cost Awareness and Control: If you understand where your biggest expenditures are, you are better able to prioritize and control them. Knowing your costs at every step of the supply and distribution chain will allow you to make smart sourcing and supplier decisions, uncovering valuable savings opportunities and process efficiencies.

Intelligence on Your Suppliers: As a retailer, you’re dealing with dozens, if not hundreds of suppliers all along the fulfillment and distribution chain. The ability to compare providers relative to quality, speed, efficiency and cost is critical if you are to control costs and remain competitive.

How to Stay Ahead of the Competition

With the right eProcurement tools and resources, traditional retailers are poised to compete in today’s “I need it now” consumer climate. By understanding more about how your inventory, spend and sourcing affect distribution and fulfillment cycles, you will be well equipped to deliver goods to your customers faster, keep costs low and grow your profits.

]]>How to Improve the Value of Procurement: Is Your ERP System Enough?https://www.jaggaer.com/improve-value-procurement-erp-system/
Mon, 15 Jan 2018 16:41:34 +0000https://www.jaggaer.com/?p=18588As chief procurement officer (CPO), is one of your goals to be considered a more relevant, strategic area for the company? If the answer is “yes”, here are four ways to improve your value through eProcurement. No doubt, the number one challenge which manufacturing organizations face today is to reduce cost while increasing efficiencies. But, […]

]]>As chief procurement officer (CPO), is one of your goals to be considered a more relevant, strategic area for the company? If the answer is “yes”, here are four ways to improve your value through eProcurement.

No doubt, the number one challenge which manufacturing organizations face today is to reduce cost while increasing efficiencies. But, focusing on operational performance does not speak to the broader strategic impact that procurement can make to the rest of the business.Moving Beyond Cost-Savings

If CPOs expect to achieve a place at the C-suite table, then you need to move beyond cost savings to deliver more strategic value to the organization. If you’re using a legacy ERP system to manage your procurement function, it may be time to assess if this system is enough to create the needed efficiencies and strategic foresight you need to lead by excellence.

Does your ERP system perform functions like supplier collaboration, spend analytics, e-sourcing, contract life-cycle management or supply-base management? These are all mission-critical to making effective purchasing decisions, leveraging spend and creating economies of scale. The fact is, a fully integrated eProcurement solution can deliver benefits far beyond an ERP system and with a much faster return on investment.

Four Ways to Deliver Real Value with eProcurement

If you’re not leveraging an eProcurement suite, you are missing a critical opportunity to achieve the full scope of benefits your department can deliver to the overall organization. Here are four ways an eProcurement solution can help elevate departmental value:

Optimize Spend: An eProcurement suite can help you get to the “why” behind spending and provide tangible savings through strategic sourcing, spend reduction analysis and identify other cost-savings opportunities.

Leverage Data Insights: Data transparency and the free-flow of information between systems is key to ensure that stakeholders can easily access the most up-to-date information. With eProcurement, you have access to robust reporting features that allow you to better understand how you spend and where you can make adjustments to achieve the greatest impact.

Realize Faster Time to Value: eProcurement data provides insights for more strategic decision-making and will track and report on the contributions you’re making to the organization.

Integrate Seamlessly: No other method will allow you to raise your competitive advantage more quickly than eProcurement. It integrates easily into existing ERP systems with seamless data movement and communication.

Bottom Line Results

The opportunity for CPOs to create value is significant. When used properly, eProcurement can provide critical insights to informed decision-making and can provide necessary tracking and reporting benefits to improved performance.

]]>5 Procurement Questions for Santahttps://www.jaggaer.com/5-procurement-questions-santa/
Tue, 19 Dec 2017 15:51:04 +0000https://www.jaggaer.com/?p=18226After pulling a few strings, we managed to catch Santa on one of his few coffee breaks at this busy time of year to fire five burning questions at the reigning world champion in procurement. Christmas is a holiday worldwide, but the busiest time at work for you. When does your year start? Actually, we […]

]]>After pulling a few strings, we managed to catch Santa on one of his few coffee breaks at this busy time of year to fire five burning questions at the reigning world champion in procurement.

Christmas is a holiday worldwide, but the busiest time at work for you. When does your year start?

Actually, we get Christmas wish lists all year long. Children have wishes all throughout the year, but it really gets going in October. Then, my elves have to work at full blast. It’s very important that each order is categorized correctly, so that each elf knows what to pack and by when. It’s also important to have an overview of wish lists that haven’t been fulfilled yet or have been changed. Some children change their wish lists several times during the year – sometimes several times during a week! We have to record all of this so that we don’t deliver the wrong toy. That would be a catastrophe.

How many children do you have to deliver to in one night?

There are 7,284,283,000 people in the world, 3 billion of whom are children. And I have to deliver to all of them in one night with my eight reindeer. For this, I need exact timing and a supply chain without any gaps. My team and I work the entire year through up to this very special day and there cannot be any mistakes. If I don’t stick to the delivery date, I lose the trust of my most important customers – the children. I can’t afford any damage to my image. If the children don’t believe in me, I wouldn’t exist.

How do you handle the sheer number of orders, all with the same delivery date?

I have a lot of help! To get a grip on all the orders, I use the solution of JAGGAER, a globally recognized for procurement optimization. I especially use the solutions for complex logistics: Vendor Managed Inventory, call-off, Kanban, and more. As soon as an order arrives, this is processed immediately and made available. To keep storage costs at the North Pole as low as possible, I deliver the presents to hubs strategically placed all around the world before they travel the final few miles on December 24th to find their way under the Christmas tree.

To buy such an enormous range of presents, you definitely need a well thought-out supplier database with a highly sophisticated category strategy. How do you implement this?

That’s right – we have numerous suppliers. Lots of children have special wishes that often only a single supplier worldwide can fulfill. We have a special strategy for such single-source suppliers. If this kind of partner disappears, we’re stuck. So they have to be nurtured and fostered the whole year round. By establishing a long-term partnership, we can reduce costs together, ensure high quality, and potentially improve the product through cooperative R&D.

In other industries, such as cuddly toy production, there are a variety of suppliers. We take extra special care that the cuddly toys are produced sustainably. We support companies who work without child labor, use renewable raw materials, and behave in a socially responsible way. As a rule, we have strict CSR policies.

Because December is very busy and you only bring presents to good children, do you have a system to see who has been good and who has been bad?

My workers make an account for each order received, which is then deleted when the child becomes a grown-up. The customer is then observed all year long and graded. For this, we use a rating system that has been developed especially for us. It’s a supplier rating system that has also been expanded so we can rate our customers. In mid-December, the ratings tell us how many presents each child is entitled to and we can define our orders to our suppliers more exactly. So you better be good all year round!

Thank you very much for taking time out of your crazy schedule to talk to us, Santa.

]]>Multi-Stage Optimization: Your Supply Chain, Evolvedhttps://www.jaggaer.com/multi-stage-optimization-supply-chain-evolved/
Thu, 30 Nov 2017 15:14:31 +0000https://www.jaggaer.com/?p=18097Imagine this: You own a popular restaurant on the East Coast—let’s say it’s a Tex-Mex/Thai/New England seafood fusion restaurant—and business is going so well that you want to open a second location…in California. Now, in order for it to be as successful as the flagship location, the new restaurant will need to have the same […]

]]>Imagine this: You own a popular restaurant on the East Coast—let’s say it’s a Tex-Mex/Thai/New England seafood fusion restaurant—and business is going so well that you want to open a second location…in California.

Now, in order for it to be as successful as the flagship location, the new restaurant will need to have the same quality of ingredients delivered on time with the supply chain efficiency required to keep the establishment profitable. But most of your ingredients and suppliers (not to mention the vendors who provide non-food items like napkins, cleaning products, and other restaurant essentials) are near your East Coast restaurant. Shipping everything to California will be cost prohibitive at best, and a no-go for some of the ingredients that have a short window of freshness.

What you would need in this scenario—and what restaurant, retail, consumer packaged goods, manufacturing, and logistics companies need for hundreds of widely dispersed locations—is the ability to base an award on multiple criteria across all decision points in the supply chain. You would also need to create additional, in-event bids based on multiple business units or specific vendor locations, and receive complete reporting on every touch point along the way. A tool allowing for this would enable you to find the right suppliers, materials, and processes that are most cost-effective, logistically efficient, and use ingredients and materials that meet your restaurant’s values. This unique process is a necessity, especially as the number of locations continues to grow. And it is exactly what is currently available in JAGGAER’s Advanced Sourcing Optimizer (ASO) offering.

Let’s take our hypothetical scenario one step deeper. For example, your restaurant has a signature sauce that you currently make yourself. With this expansion, you need to evaluate the cost effectiveness of sourcing all the ingredients and continue to make this sauce yourself against the possibility of having a third party make the sauce, either using their own base material vendors or using your suppliers—while also factoring in that this sauce would need to be packaged both in the large #10 cans for use in the restaurant kitchens and/or in decorative mason jars for retail sale. And this sourcing, processing, and transportation needs to be balanced against the rest of the supply network.

Enter Multi-Stage Optimization, or MSO. It represents the biggest evolution in ASO since its launch. MSO will help organizations evaluate suppliers’ capacity to meet demand at multiple levels across the supply chain, determine the optimal approach for each transformative decision point, and will incorporate stakeholder preferences and requirements in sourcing strategy and bid analysis at various points throughout the process.

ASO’s built-in flexibility has always allowed our users source all manner of items—from tangibles like consumer packaged goods, business materials and equipment, consumer or manufacturing machinery, pharmaceuticals, and packaging, to intangibles like freight, housekeeping services, advertising, and anything in between—through suppliers and processes that make the most business sense for their company. With MSO, JAGGAER gives sourcing teams even more power by allowing them to control and direct the multiple layers of their full supply chain processes. Do I buy the raw materials and make it myself? Do I purchase the completed good from a third party? Do I have the ability to negotiate better pricing for those base materials, or do the third party producers? And how do all those pieces fit in with available supplier capacities and carrier rates needed to deliver components and final products to each step of the path? MSO allows its users to answer all those questions and more by incorporating with ASO’s ability to define business rules and constraints to feed into the final make vs. buy decisions.

Visibility into upstream materials has become more important in recent years—with an increased focus on green, environmentally friendly materials. However, researching the composition and origin of sourced items is often a manual, time-intensive process.

ASO already gives organizations a robust tool kit, making every stage of the procurement process transparent, cost-effective, efficient, and a fit for the company’s mission and values. MSO takes this to a new level by integrating the multiple steps and the transformations between them into one holistic view and optimization. Whereas sourcing events can be optimized independently, by making sure each event lines up and works together in a way that lends to full supply chain efficiency, MSO not only saves on logistical and management costs, but increases the opportunities for competitive bidding along the way and allows organizations to leverage common pricing across similar items.

The JAGGAER development team has been working closely with its development partners in launching this new Event Type, as several have been using ASO for years to ensure the best results for their sourcing needs. Expanding into the MSO space is giving organizations the ability to direct the production of their proprietary blends, source the base materials needed, and direct the packaging and distribution of those materials while enforcing their quality and specific standards across the entire supply chain.

Large restaurant chains need to assure the quality and sources of their food. They also need to use different suppliers or even slightly differing materials depending on the location of their widely-dispersed restaurants. Some steps in the supply chain might be the same for large numbers of locations, but somewhere along the way that chain will begin to branch off to better accommodate individual or regional subsets: MSO allows companies to optimize each of those individual branches as well as the overall chain, and gives the organization both visibility and control of the way everything flows together. Even if you’re just opening up a second location, significantly distanced from your first—like in our monstrous fusion combination restaurant example at the top—the ability to granularly optimize each step along the way will make your whole enterprise more efficient.

Read more about MSO and how it can help organizations achieve full supply chain efficiency, along with other upgrades in 17.3, here.

]]>‘Tis the season when supply chains are under pressure to meet customer demands and to keep internal business procedures running smoothly. Companies not optimizing their holiday supply chain and procurement processes are subject to risk. Disruptions, unpredictable demand, increased customer service expectations, and the need for faster communication between buyers and suppliers have made maintaining a robust and efficient supply chain a necessity.

The National Retail Federation (NRF) has issued a forecast expecting 2017 holiday retail sales in November and December to rise between 3.6 and 4 percent over last year for a total of $678.75 billion to $682 billion. For many retailers, this is good news as they look to boost their bottom lines. However, for those companies without an efficient supply chain and procurement process in place to manage ever-increasing demand, the heightened strain could spell disaster.

How can companies minimize holiday supply chain problems?

Real Time Analytics and Reporting

Leverage a spend analytics tool to make data-driven decisions and stay alert to maverick spend. Reports from such tools can help you identify which suppliers, categories and commodities are receiving the majority of your dollars. These are the areas where investing time to achieve pricing reductions and enhance supplier value will be most lucrative.

Develop Relationships with your Strategic Suppliers

Supplier relationship management is critical for driving procurement value. It’s no longer about just getting the lowest price, especially during the holiday season when delivery time and product quality are top priorities. If supplier relationships are improperly managed, contracts can be neglected and drain a substantial amount of value over time.

Get a Handle on Transportation Sourcing

Moving raw materials and finished goods from one place to another has always challenged suppliers, manufacturers, and retailers alike. The holiday shuffle and inclement weather add additional challenges. By leveraging analytics and sourcing optimization technology, sourcing pros can analyze price and non-price bid information to make best price and lowest risk decisions.

Are you effectively managing your supply chain risk during the holidays? Give us a call to discuss how we can help!

]]>For procurement teams who want a solution that delivers to their custom needs while keeping up to speed with technological advances in the industry, JAGGAER’s 17.3 Impala release delivers just that. In this latest release, highlighted upgrades to our full product suite include Multi-Business Unit (MBU) management capability and Multi-Stage Optimization (MSO) for our Advanced Sourcing Optimizer (ASO).

Impala was designed with direct feedback from multiple customers to deliver global scalability with intelligent workflows that eliminate human intervention, and are customizable for specific industries. Perhaps the most noteworthy advancement in this release is the milestone MSO brings to our award-winning ASO product. MSO triples ASO’s power with unparalleled control and visibility into all aspects of the supply chain.

Below, we dive deeper into some additional features the Impala brings:

True two-way collaboration between buyers and suppliers that need fast resolution of critical elements with one another during the sourcing process. With this feature, buyers can now submit private questions to individual suppliers during an event, clarifying the supplier’s response and streamlining the selection process.

Price is right adjustment for customers in retail and consumer products that need to retain the cost of services and maintain profitability in support of their distribution model. This feature allows catalog price markups by business unit (for example: storefront, manufacturer, and warehouse), commodity code, or UNSPSC in order to maximize profit margins and balance economies of scale for each member within the distributed network.

Improved global supplier registration and creation process for customers that desire an easier way to capture critical supplier sourcing information. This feature extends supplier profile data to automatically flow through the system via a new supplier request form, eliminating any need for manual manipulation. Buyers receive automatic notifications on the status of supplier registrations and approvals so that the appropriate action can be taken quickly.

Integrated change management for third-party systems that customers or partners require for additional enhancements in areas such as risk or regulation. This integration process drastically speeds up the time to integrate those provider systems with the JAGGAER platform, providing added value for a customer in short order.

To learn more about the power, speed, and performance of Impala see here.

]]>United Arab Emirates has Announced the Implementation of Value Added Tax for January 2018https://www.jaggaer.com/united-arab-emirates-announced-implementation-value-added-tax-january-2018/
Thu, 02 Nov 2017 18:55:07 +0000https://www.jaggaer.com/?p=17697President His Highness Shaika Khalifa Bin Zayed Al Nahyan of the United Arab Emirates decreed that a Value Added Tax (the official title of the decree is Federal Decree-Law No.(8) of 2017) of 5% will be applied to the import and supply of goods and services to the UAE starting January 1st, 2018. A Value […]

]]>President His Highness Shaika Khalifa Bin Zayed Al Nahyan of the United Arab Emirates decreed that a Value Added Tax (the official title of the decree is Federal Decree-Law No.(8) of 2017) of 5% will be applied to the import and supply of goods and services to the UAE starting January 1st, 2018. A Value Added Tax (VAT) is a tax that is applied on goods and services at each stage of the supply chain. The addition of the VAT means that consumers will pay for the tax via price increases and businesses will serve as intermediaries to collect the tax.

Businesses will be responsible for documenting all income and costs associated with the implementation of VAT. Registered businesses and traders will charge VAT to all their customers at the prevailing rate and incur VAT on goods and/or services that they buy from suppliers. The difference between these sums is reclaimed or paid to the government.

There are some exceptions to the new law and are classified as supplies of goods and services that are subject to Zero Rate. Some of these exceptions include investment precious metals, crude oil and natural gas, educational services, preventative and basic health care services, and aircrafts or vessels designated for rescue and assistance by air or sea. Click on the UAE’s Ministry of Finance website for more details.

Companies should keep the following points in mind when preparing themselves for the VAT registration:

Educate and train all the stake holders in the businesses regarding VAT and implications;

Make sure that the supplier invoices have assessed the VAT ID and the VAT % and Amount correctly;

Examine existing and ongoing contracts and ensure procurement has made the appropriate adjustments and/or amendments;

Know that, per the new law, VAT invoices must be retained for 5 years;

File VAT submissions by established deadlines, businesses will incur huge penalties for late filings;

Make existing electronic financial, procurement, or other IT systems VAT-compliant;

Maintain VAT details with respect to each emirate; and

Examine and/or check for the applicable VAT rules for business with GCC countries.

VAT is good for the UAE’s economy, but could be little tedious for the businesses and consumers. Learning how to apply the levy and, most importantly, account for VAT for regulatory reporting and filings will help make this process a smooth transition for all key stakeholders.

]]>Indirect vs. Direct Goods and Services – What’s the Difference?https://www.jaggaer.com/indirect-vs-direct-goods-and-services-whats-the-difference/
Thu, 19 Oct 2017 18:58:38 +0000https://www.jaggaer.com/enterprise_blog/indirect-vs-direct-goods-and-services-whats-the-difference/Let’s say that, instead of procurement services, you produced soda bottles instead. What would your spend management goals be? Or, what if you are looking to hire an “A Team” for your department? What would your spend management goals be then? How would they be different? Understanding the distinction between direct and indirect goods and […]

]]>Let’s say that, instead of procurement services, you produced soda bottles instead. What would your spend management goals be? Or, what if you are looking to hire an “A Team” for your department? What would your spend management goals be then? How would they be different? Understanding the distinction between direct and indirect goods and services will help you determine your spend management goals and set your roadmap. Like so many things in the world of procurement, there are no hard and fast rules for what the terms “direct” and “indirect” goods and services mean. That said, we have created a guideline (listed below) to help you distinguish the difference between the two categories.

Direct Goods and Services:

Typically, a tangible item that includes measureable specifications (size, type of packaging used, etc.) and ties to a bill of material.

It falls under the umbrella of supply chain because the materials to make the product are direct from suppliers. Specifically, it falls within procurement, who will own the supplier relationships.

The cost of the item can be broken down into raw materials, conversion, packaging and shipping.

You can forecast total direct spend based on your projected sales via your ERP system.

When dealing with direct goods and services, you share goals with the supply chain team. Those goals may include: lowering costs, decreasing waste, or driving savings to the bottom line. While these goals are important and should be kept top of mind, they are not your only priorities. Other important considerations should include: reducing lead times, managing inventory, risk mitigation/management, supplier led innovation, and sustainability.

Indirect Goods and Services:

May or not be a tangible good. Often, they have no measurable specifications and no bill of material, but will include a statement of work.

There is no pre-determined amount to buy. Instead, the cost is determined by the perceived value of the item. For example, when sourcing talent for your organization, you need to estimate compensation for a worker based on the level of value you believe they will bring to the organization.

You can forecast the cost of indirect goods and services via a budget holder (a senior manager or director of the business).

Often, indirect goods and services are managed by a three-way relationship: a business partner, a supplier, and the procurement department.

With indirect goods and services, your goals may vary by group or by project. For example, your department’s goal may be to lower costs, while another group may increase budget to reduce time spent on the project. Unfortunately, your goals may be harder to achieve because the indirect space sees more “one-time” buys than the direct space, which means there is often no historical spend by which to make a fair comparison. Achieving spend management goals in this space may mean focusing more on cost avoidance rather than savings.

Direct and indirect goods and services are both critical to your business. When you have a stronger sense of understanding what they are, how they are different, and how your understanding can be leveraged to achieve your spend management goals, the result is significant contribution to your company’s overall success.